If we re-export automotive headlamps, which we imported as finished products from China and then repackaged for sale in Korea, to the Chinese market, can we receive a Certificate of Origin as 'Made in Korea'? Released

If automotive headlamps imported as finished products from China are repackaged in Korea for sale and re-exported to the Chinese market, the product cannot be issued a certificate of origin as "Made in Korea." This is because it does not comply with the 'Substantial Transformation' principle, a core principle of international trade that determines the origin of goods.

Country of Origin refers to the country where goods are produced, manufactured, or processed, and it serves as a key criterion for various trade policies such as customs duties, trade statistics, quantitative restrictions, and the application of anti-dumping and countervailing duties. The most basic principle for determining origin is that the country where 'substantial transformation' occurs, which gives the goods their character and essence, is considered the country of origin. This means that critical processing operations that completely change the nature of raw materials or components to create a new product must take place in that country.

Reasons why simple repackaging operations cannot change the country of origin are as follows:

• Maintenance of essential characteristics of goods: Even if the packaging of automotive headlamps is changed domestically, their essential functions, characteristics, and physical form remain identical to those of the finished products manufactured in China. Packaging operations do not alter the inherent nature of the product itself.
• Absence of substantial processing: To change the country of origin, substantial transformation processes such as manufacturing, assembly, or processing must take place on the goods. Simple operations merely for preserving, transporting, or facilitating the sale of goods, such as packaging, repackaging, sorting, selecting, labeling, cleaning, drying, or simple assembly, are generally not considered substantial transformations that affect the determination of origin.
• Failure to meet the Change in Tariff Classification (CTC) criterion in the tariff schedule: Most countries and Free Trade Agreements (FTAs) adopt the 'Change in Tariff Classification (CTC)' as a criterion for determining origin. This criterion requires that the HS code (Harmonized System code) must change by a specific unit (e.g., 2-digit, 4-digit, or 6-digit) or more through the manufacturing or processing of goods for origin to be recognized. Simple packaging operations do not change the HS code, thus this criterion cannot be met.
• Failure to meet the Value Added Content (VAC) criterion: Some FTAs also require a certain percentage of value-added occurring in the country (e.g., regional value content of 35% or 40% or more) as an origin criterion. The value added generated by simple packaging operations is minimal, making it difficult to meet this criterion.

Therefore, since automotive headlamps finished in China have not undergone any substantial manufacturing or processing in Korea, their country of origin remains 'China'. It is impossible to issue a certificate of origin as "Made in Korea," and when re-exporting such products, the country of origin must be indicated as 'China'.

However, if processes that lead to 'substantial transformation' are added in Korea, such as manufacturing core components of the headlamp directly, or producing a new headlamp through a complex assembly process using both Chinese and Korean components, then the possibility of a change in origin to "Made in Korea" can be considered. Examples include manufacturing and assembling key optical or electronic components within the headlamp directly in Korea. However, merely packaging a finished product does not fall into this category.

Country of origin regulations are highly important in international trade, and incorrect origin declarations can lead to severe disadvantages such as customs duty surcharges, penalties, customs clearance delays, and damage to corporate image. Therefore, accurate understanding and compliance are always necessary. The determination of origin for specific items can be very complex with diverse detailed regulations, so if you have further inquiries or require in-depth review of a specific situation, we recommend consulting with a customs expert.